2007 CONSULTING AGREEMENT
THIS 2007 CONSULTING AGREEMENT (this “Agreement”) is entered into on this 5th day of March 2007, with an effective date of November 15, 2006 (the “Effective Date”) by and between Penn Octane Corporation, a Delaware corporation (“Penn Octane”) and Rio Vista Energy Partners L.P., a Delaware limited partnership (“Rio Vista”) (Penn Octane and Rio Vista collectively, the “Company”) and JBR Capital Resources, Inc., a Nevada Corporation (“Consultant”), as follows:
In consideration of the covenants and agreements contained herein, the parties agree as follows:
Section 1: Engagement of Services
1.1 Services Performed by Consultant . Consultant shall serve as a special advisor to Penn Octane and Rio Vista and shall provide the following services (the “Services”) to the Company: assistance with the Company’s acquisition and disposition of assets, assistance with other transactions involving the Company, and such other services as may be mutually agreed between the Company and Consultant. Consultant’s duties may be reasonably modified at the Company’s discretion from time to time. Consultant will report directly to the chief executive officer and the chairman of the board of directors of Penn Octane and the chief executive officer and the chairman of the board of managers of the general partner of Rio Vista.
Consultant shall at all times faithfully and diligently perform the Services under this Agreement and use Consultant’s best efforts, skill, and attention for the fulfillment of the Services and the interests of the Company. Consultant shall have discretion and control of the rendering of the Services and the manner in which said Services are performed. Consultant shall perform all such Services under the name and as a representative of the Company to any third parties engaged in discussions with the Company. Unless otherwise agreed to by the parties, Consultant shall have no obligation to work any particular hours or days, nor shall Consultant be obligated to devote full time to the performance of the Services.
1.2 Company Affiliates . Consultant acknowledges and agrees that the Company may, from time to time, request Consultant to provide the Services or such other related services to any of the Company’s Affiliates, subject to the terms and conditions of this Agreement. For purposes of this Agreement, “Affiliates” shall mean a parent company, or an affiliated or subsidiary corporation or any other legal entity that is owned, whether entirely or partially, or controlled by the Company. As used in this definition, “owned or controlled by” means owns or holds the right to vote any of the stock or units of such entity, including without limitation, the Company’s affiliated limited partnerships and limited liability companies in the United States and the Company’s affiliated entities in Mexico. To the extent that the Consultant provides any services to the Affiliates, such Affiliates would have all the rights and benefits provided to the Company hereunder, as if such Affiliates were the Company.
1.3 Independent Contractor . Consultant enters into this Agreement as, and shall continue to be, an independent contractor. Under no circumstances shall Consultant look to the Company as his employer, or as a partner, agent or principal. There shall be no tax withholdings taken from any Fees paid to Consultant pursuant to this Agreement (including, without limitation, FICA, state and federal unemployment compensation contributions, and state and federal income taxes), and Consultant shall pay, when and as due, any and all taxes incurred as a result of Consultant’s compensation pursuant to this Agreement. Upon request, Consultant shall provide the Company with proof of such payment.
Consultant will indemnify and hold harmless the Company from and against all claims, damages, losses and expenses, including reasonable fees and expenses of attorneys and other professionals, relating to Consultant’s failure to pay such taxes as well as any obligation imposed by law on the Company to pay any withholding taxes, social security, unemployment or disability insurance, or similar items in connection with compensation received by Consultant pursuant to this Agreement.
Consultant also understands and agrees that Consultant shall be solely responsible for complying with all federal, state, and local laws requiring business permits, certificates, and licenses required to carry out the Services to be performed by Consultant under this Agreement. Furthermore, Consultant recognizes that it is Consultant’s responsibility to obtain all insurance coverage (including workers’ compensation) for Consultant. Upon request, Consultant shall provide the Company with proof of such coverage.
1.4 Agency . It is expressly understood and agreed that Consultant shall only represent the Company to the extent expressly authorized by this Agreement, and in no other way, and that Consultant shall not be an agent of the Company. In this regard, Consultant shall have no authority to enter into any agreements or other binding obligations on the Company’s behalf without the prior specific written authorization of the Company, and that Consultant shall not hold himself out as an officer, employee or agent of the Company; provided, however, that Consultant may hold himself out as a representative of the Company as specifically authorized by this Agreement or otherwise by the Company.
Section 2: Compensation
2.1 Payment of Fees . In consideration of the Services rendered by Consultant to the Company and/or to the Affiliates, the Company agrees to pay the following fees (“Fees”) to Consultant:
(a) an amount equal to $2,000.00 per day of Services, each such day of Services to be authorized in advance by the Company. No Fees shall be due or payable for days of Services unless authorized or approved by the Company. Consultant shall (i) submit each invoice for Services to the Company for review and approval, (ii) furnish a reasonably detailed description of Services for each day covered by an invoice, (iii) furnish separate invoices for Services performed on behalf of Penn Octane and on behalf of Rio Vista, and (iv) deliver all invoices to the Company within thirty (30) days following the month in which the Services were performed. Subject to the foregoing, Fees under this Section 2.1(a) will be due and payable to Consultant thirty (30) days following the receipt by the Company of Consultant’s approved invoice for Services; and
(b) an amount equal to two percent (2%) of the net proceeds to the Company resulting from a sale of assets to a third party introduced to the Company by Consultant. Net proceeds shall equal the total purchase price for the assets, subject to any adjustments contained the purchase and sale agreement, net of transaction costs. Purchase price adjustments shall not include payment of intercompany debt, and transaction costs shall not include taxes or other costs not directly related to the sale. Fees under this Section 2.1(b) will be due and payable to Consultant thirty (30) days following the receipt by the Company of such net proceeds. Consultant shall be entitled to Fees with respect to any such sale of assets that occurs after the Effective Date and on or before ninety (90) days following any termination or expiration of this Agreement. Consultant shall not be entitled to any Fees with respect to any sale of assets that (i) occurs more than ninety (90) days following any termination or expiration of this Agreement or more than one year following the Effective Date, whichever first occurs, or (ii) is made at any time to a third party not introduced to the Company by Consultant. For purposes of this paragraph, TransMontaigne Product Services Inc. and its affiliates shall be deemed to be a third party introduced to the Company by Consultant.
Penn Octane will be responsible for payment of Fees only with respect to Services relating to Penn Octane. Rio Vista will be responsible for payment of Fees only with respect to Services relating to Rio Vista. With respect to Services relating to both Penn Octane and Rio Vista, the Fees will be shared equally by Penn Octane and Rio Vista unless otherwise determined by the Company. Rio Vista will reimburse Penn Octane for any Fees that Penn Octane pays to Consultant on Rio Vista’s behalf.
In the event of any disagreement between the Company and Consultant with regard to the calculation of Fees, the amount of Fees shall be conclusively determined by the Company’s independent public accountants within thirty (30) days following written request by either the Company or Consultant, and the Fees will be due and payable ten (10) days following such determination.
Nothing contained in this Agreement shall preclude the Company from paying additional fees or compensation to Consultant in connection with the completion of any transaction relating to the Services. Any understanding regarding such additional fees or compensation will be memorialized in a separate written agreement between the parties. No additional fees shall be due or owing by Company to Consultant in the absence of such a separate agreement.
2.2 Expenses . Consultant shall provide receipts for all actual, reasonable travel and other out-of-pocket expenses incurred by Consultant as necessary in connection with the performance of the Services by Consultant. Consultant agrees to submit to the Company such documentation as may be necessary to substantiate all such expenses and reimbursements for deduction by the Company as reasonable and necessary under Section 162 of the Internal Revenue Code. No expense claim submitted by Consultant more than ninety (90) days after incurred shall be reimbursed.
2.3 Taxes. Fees do not include taxes. To the extent that Consultant is required to pay any federal, state or local income, sales, use, property or value-added taxes based upon the Fees and/or the Services provided under this Agreement, such taxes shall be the sole responsibility of Consultant.
Section 3: Term; Termination
3.1 Term . The initial term of this Agreement shall be six (6) months beginning on the Effective Date unless terminated sooner in accordance with the provisions of this Section 3.1 . This Agreement shall automatically renew for an additional six (6) months at the end of each 6-month term unless terminated upon written notice to the other party at least thirty (30) days before the end of such term. Each of the Company and Consultant may terminate this Agreement, with or without cause, at any time upon thirty (30) days’ written notice to the other party. Notwithstanding the foregoing, the Company may revoke the authority of Consultant to act as a representative of the Company at any time upon written notice to Consultant. The provisions of this Agreement specified in Section 10.12 shall survive the expiration or termination of this Agreement.
3.2 Final Payments . Following termination of this Agreement in accordance with Section 3.1 , any accrued, but unpaid, Fees shall be shall be paid to Consultant in accordance with Section 2.1 . Within thirty (30) days following the date of such termination, Consultant shall submit a final expense reimbursement request to the Company in accordance with Section 2.2 .
Section 4: Confidentiality.
4.1 Duty to Maintain Confidential Information.
(a) The Company and the Affiliates have previously furnished to Consultant, and may continue to furnish to Consultant, such information, proprietary data and access to the Company’s personnel and records (all such information and access, “Information”) as reasonably necessary and/or appropriate for Consultant to perform the Services, the confidentiality of which gives the Company and the Affiliates a competitive advantage in its business. As used herein, the term “Information” is to be broadly construed and includes, but is not limited to, (i) presentations, ideas, trade secrets, processes, systems, techniques, formulas, source and object code, data, programs, know-how, flowcharts, methods, compounds, diagrams, drawings, models, specifications, improvements, discoveries, developments, designs, and other works of authorship, whether patented or registered for trademark or copyright protections, if any, (ii) information regarding marketing, sales, licensing, accounting, product or service development, assets, competitive analyses, unpublished financial statements, budgets, forecasts, prices, costs, business plans, research and development plans, clients, client marketing, research and any other confidential client activity, suppliers, and employees, (iii) information relating to potential acquisitions, dispositions and financing of the Company and Affiliates, and (iv) any other information of the type which the Company and/or the Affiliates have a legal obligation to keep confidential or which the Company and/or Affiliate treats as confidential or proprietary, whether or not owned or developed by the Company or the Affiliates. The term “Information” shall also include any and all such Information pertaining to the Company, its Affiliates, and their respective customers and suppliers.
(b) During the time that this Agreement remains in effect and at all times thereafter, Consultant agrees:
(1) to keep the Information confidential and not to copy, publish, transmit, or disclose to others or allow any other party to copy, publish, transmit, or disclose to others, any Information, except in accordance with Consultant’s fiduciary duty to the Company pursuant to this Agreement and in furtherance of the interests of the Company and the Affiliates;
(2) to use the Information exclusively for the purpose of performing the Services under this Agreement and for no other purpose; and
(3) that the Information is, shall be, and shall remain the exclusive property of the Company and the Affiliates, and Consultant shall neither have nor acquire any right, title, or interest therein.
(c) The foregoing confidentiality obligations of Consultant shall not apply to any information that is (i) a matter of public knowledge (from a source or sources other than Consultant), (i